Promigas S.A. E.S.P. (PROMIGAS) Earnings Call Transcript & Summary

Good morning. Welcome to our Investor Day 2022. We are very happy to be back hosting an in-person event in New York City, while, at the same time, offering a virtual option to allow analysts and investors from all over the world to join us in a thorough conversation about Promigas' operations, strategy and outlook. We appreciate your interest in participating in this event to learn more about Promigas' recent achievement. I am Juliana Vergara, Director of Investor Relations. Here with me today is our leadership team. First, Juan Manuel Rojas, our CEO, joined us at the very end of 2021 after developing his career for over 20 years in the energy sector in Latin America. Prior to this, he served as a Corporate Vice President of Strategy and New Business at Ecopetrol for almost 6 years, overseeing the company's expansion of its oil and gas, electric power and other energy-related businesses. In addition, he has been consultant on energy projects for the World Bank and has served as Deputy Prime Minister of Energy in Colombia between 2000 and 2001. Also with us is Natalia Abello, Vice President of Corporate Affairs and Sustainability; Alejandro Villalba, Vice President of Operations and Innovation; Ricardo Fernández, Vice President of Transportation Strategic Business Unit; Wilson Chinchilla, Vice President of Distribution Strategic Business Unit; and finally, our CFO, Aquiles Mercado. All of them will participate in a fireside chat today that will demonstrate how Promigas has been a pioneer and leader in Latin America's energy center with a proven track record and consistent profitability for nearly 50 years. We will be asking our executive team key questions about the company's strategy and operations in our core businesses of natural gas in both Colombia and Peru as well as our entry into energy solutions and nonbank financing initiatives while adding how regulation, ESG and innovation are impacting our operations, projects and growth. Through a series of presentations and discussions, you will see the company in action. Attendees will be invited to ask questions at the end. A copy of the presentation and other relevant materials are already available in the Investor Relations section of our website. For those of you who are less familiar with Promigas, please allow me to start by briefly introducing our company. Promigas was founded in 1974, and it was initially created as a natural gas transportation company for the Caribbean Coast of Colombia. Ten years later, the firm began looking for new growth alternatives and invested in other gas, transportation and distribution companies, with similar activities in its area of influence looking for synergy opportunities. Today, Promigas, composed of 23 subsidiaries and 2,400 employees, has evolved into a leading sustainable energy business essential for the energy matrices of Colombia and Peru. Since the 1970s, we have been pioneers and leaders in the natural gas market, and we own the only liquified natural gas regasification terminal on the North Coast of Colombia. SPEC, or Sociedad Portuaria El Cayao, is the country's strategic interconnection with international LNG sources, and it is a vital asset that provides stability and reliability to Colombia's energy system. Throughout our history, our growth has been very disciplined and responsible. We have provided our investors with substantial profitability and stable cash flows that stem from our regulated businesses. Both local and international capital markets trust Promigas to be a long-term investment, a company that can comfortably achieve its financial goals and does so with a high level of social and socio-strategic awareness in the development of energy markets. Our investors are also informed of our major commitment to maintaining an investment-grade profile. With a solid and stable local AAA rating from Fitch for 21 consecutive years, 2 years of Moody's Baa3, Fitch's BBB- ratings during the last 11 years and stable local investment-grade ratings for 4 subsidiaries for both Moody's and Fitch, Promigas has been able to finance its operations and projects and connect and bring progress to communities in our path. Our natural gas footprint extends to almost 3,300 kilometers of gas pipelines, and we specialize in the midstream of the natural gas value chain. This year, we achieved a milestone of serving 6 million Colombian and Peruvian end users in residential, commercial, industrial and NGV markets. We are confident about our future, and our customers and partners trust us, for we provide dependability like no other. During the entire operating life of Promigas, we have served our clients with 99.8% continuity. Even in the face of the global pandemic, we were able to guarantee 100% of reliability in our service, ensuring that families and businesses had access to Colombia's energy grid. In addition, as the world progresses towards a greener future, Promigas is one of the leading sustainable companies in Latin America, actively contributing to the energy transition through continuous innovation, investments in digitalization, distributed energy, efficient mobility, renewable gas integrations and promoting the usage of LNG, the cleanest fossil fuel available. All of this is being done with the help of our Center for Energy and Gas Research and Innovation. We take pride in our ESG initiatives for a better tomorrow, for a brighter future. Besides our environmental investments towards decarbonization, we are also present in 100% of the communities currently located in the direct area of influence of our operations with social programs. Another way that we give back to our community is through Brilla, a nonbank financing alternative created by Promigas in 2007. It was designed to fulfill the desires of customers to have access to a formal credit line that enables households to acquire the products they most want and, in general, improve their quality of life. Since its inception, Brilla has helped over 4.5 million clients grow and achieve their goals. And on the governance side, we have made significant achievements in terms of organizing how we relate and incorporate decisions with our subsidiaries. Before opening the floor to our presentation of first quarter results, I would like to thank everyone again for joining us today. Together, we have overcome the difficult times brought on by COVID-19, and it is a true testament to our strength to survive and thrive. Moving forward, even with current inflation fears and geopolitical uncertainties, we continue to remain confident about how we are positioned and how we will continue to grow responsibly under our [ watch ]. Now I give the floor to Juan Manuel Rojas, our CEO.

Good morning to everyone. Thanks for joining us today, this morning. And good morning to all those that are connected virtually and to our collaborators that are connected, too. Let me begin with the first quarter results and with the relevant facts during this first quarter. First of all, and from the financial standpoint, I want to highlight that we achieved an EBITDA that is 39% above compared to last year's first quarter EBITDA. In U.S. dollar terms, it's equivalent to $167 million. We also achieved a net income that is 35% above the one achieved during the first quarter of last year, equivalent to $96 million. Second, I want to highlight, as Juliana mentioned in the video, that we achieved a milestone of serving 6 million users between our distributed gas business and our electricity distributed business. That is a major milestone. I want to highlight that 3/4 of those users are based in Colombia and 1/4 are now based in Peru, a country where we are growing substantially. Third, I want to mention that we have begun our diversification process in the energy transition. Today, we have more than 40.8 megawatts installed capacity owned by Promigas serving our clients. We have 45 megawatts under administration, operation and maintenance, and a big percentage of those megawatts are in solar distributed energy. Regarding our diversification, as you saw in the video, one of our main sources of diversification is the Brilla Nonbanking Financing business that we are carrying out. We now have 761,000 users of credit, holding credits in Brilla, and we have been able to serve 4.5 million users with this type of credits. Just during the first quarter of this year, we were able to place $63 million in Brilla through these nonbanking financing services. Another milestone during this first quarter was the inauguration that we carried out during the month of March of our first hydrogen -- green hydrogen injection into the natural gas network of blending. We were able to inaugurate this in Cartagena in the city gate of La Heroica during the month of March with President Duque. Now let's move to the specific lines of business. Regarding our Transmission business, LNG and Services, I want to highlight that even though we had a rainy year, this year has been particularly wet in Colombia with lots of hydro generation, and therefore, we have had a lower need for regasification. Still, we have been able to serve the country through our LNG facility, providing reliability to our operations with the highest standards of security, service continuity indicators. Throughout the year, we have transported 465 million cubic square feet of gas through our networks, an increase of 2% compared to the first quarter of last year. Regarding our Distribution business, I want to highlight that we increased the number of customers by 9%. In gas, in the distribution of gas, we now have 5.6 million customers, and of those, 1.6 million allocated in Peru. I want to mention that during the first quarter of this year, we were able to increase in 26% the number of customers in Peru compared to what we had the previous year. And we're now servicing 63 towns in Peru, an increase of 11%. Regarding the distribution of electricity, we increased by 3% the amount of customers, reaching 427,000 customers served in the Cauca region of Colombia, very difficult to recuperate. And we have been able to reduce the losses -- distribution losses to 14%. When we got this asset several years ago, the losses were at 40%. Now we're at 40%. Regarding our Nonbank Financing business, as I mentioned earlier, we now have 761,000 active customers. We have a portfolio, outstanding portfolio, of $376 million, COP 1.4 billion. And during the first quarter of this year, we were able to place $63 additional million more to these customers. If we take a look to the consolidated financial results of the company, first, I want to mention the balance that we have between both business units of our core business, the Transmission and the Distribution. As you will see, 51% of our EBITDA stems from the Transmission business, while 49% of the EBITDA stems from the Distribution business. That's a good diversification. Regarding the net income, 47% comes from the Transmission business, while 53% comes from the Distribution business. This is very relevant. We have a balanced business in terms of risk. The other thing that I want to highlight from this slide is the increase that we achieved in revenues, 27% compared to the first quarter of last year; in EBITDA, 39%, as I mentioned earlier; and in net income, 35%. Regarding Promigas' numbers, the individual results of Promigas, I want to highlight that we were able to increase 40% our revenues, reaching $76 million during the first quarter compared to the first quarter of 2021. Our EBITDA was increasing 41% for Promigas, reaching $132 million. And our net income, we were able to increase it by 35%, reaching $105 million. All this, we have been able to achieve it through servicing our customers in a safe, reliable and efficient manner. By reliability of our operations, we mean that we keep losses in our systems well below the 1% regulatory threshold. During the first quarter of this year, our losses were up 0.19%, well below the 1% accepted by regulation. By reliability of our operations, we also mean that we have been serving our customers with an indicator of continuity of 100%, and we have kept that track record throughout the past 5 years. And we have kept the transported volumes in the same level as we did last year. Specifically, we have increased it by 2% this year, and we've only seen a diminishing level in the industrial sector, mainly because there were some corrective maintenance services in the refineries of Ecopetrol, Barranca and Reficar. The other sectors presented growth. In terms of innovation, as Juliana mentioned throughout our video, I want to highlight 3 main aspects. First, as I mentioned earlier, we, in alliance with our subsidiaries, Centrales Energética de Occidente and Surtigas, launched during the month of March the first pilot for green hydrogen production and injection into natural gas networks in Latin America. Let me be specific here. We are pioneers in Latin America, as Promigas has been pioneer throughout his history, its 47 years of history. We were pioneers in the massification of natural gas in Colombia through the '80s. We were pioneers in the introduction of compressed natural gas vehicles in Colombia in the '90s. In the early 2000s, we were pioneers with Brilla. Last decade with pioneers with the SPEC, our regasification terminal. And now, we are pioneers in terms of hydrogen. We are the first movers in Colombia in this area. Second, I want to mention that Promigas made what we call the green gas alliance with top universities in Colombia to strengthen the country's scientific and technological capacities in the production and use of renewable gases. We're also advancing in that area. And third, I want to highlight that CEO, Centrales Energética de Occidente, received during the first quarter of this year its second patent, mainly in the transformation system that we have. Let's go in depth into each of our strategic business units, and let me begin with the Transmission area. As you are aware, and as Juliana mentioned in her video, we have 4 transportation companies: Promigas, Transmetano, Promioriente and Transoccidente. We have a construction company, and that operates, administers and maintains infrastructure. And we have the regasification unit. When we go into the details of this strategic business unit, we will see that Transmission business unit, main focus is the client. And we offer our services on the 7 different principles supported in technological advances and digital transformation. What are those principles? First, value-added information. We are currently applying data analytic tools to comprehend better the necessities of our clients. Second, opportunity in responses while using technology to automation in order to be able to answer quickly to our clients' requests. Third, business flexibility. Fourth, this forming of strategic alliances with the clients, and that's what we are doing with energy solutions. Fifth, gas competitiveness. And in here, we're working in detail to minimize the time to market of oil and gas producers. When they find the molecules, the time that they take to bring it to the market is something that we are advancing on them to shorten that time, and they appreciate a lot those services. Sixth, reliability and continuity of these services. Early warning systems, specifically for geotechnical purposes, digitization and automatization of operations is something that we cherish in this aspect of client services. And last but not least, appropriate regulation. We cherish the cultivation of a trusted relationship with regulators since our business depends highly on regulated cash flows and tariffs. When we go into the details of the businesses, let me highlight that Promigas ended the first quarter of 2022 with 2,756 kilometers of network in the northern part of Colombia with a capacity of 951 million cubic square feet per day of transportation. Regarding our other subsidiaries, the volumes transported by Promioriente were 6% lower during the first quarter when compared to the first quarter of 2022, while those of Transmetano were 5% higher. Regarding our LNG facility, I want to highlight that we have been in operations with the SPEC for a period of 5 years now. Its capacity is 170,000 cubic meters of storage capacity. We have a daily capacity of processing 400 million cubic feet per day. That's 40% of Colombia's daily consumption. Every time that the LNG regasification unit has been demanded by the energy system in Colombia, it has been available. And we cherish that, 100% of availability. This year, given that it's a very rainy year, we have only been requested to operate, at least in the first quarter, for 1 day. During the second quarter, we have been requested to operate more days. Let me now switch to our Distribution strategic business unit. And here, I want to highlight, and as you are aware, that we have distribution companies in Colombia and Peru. In Peru, we have Quavii Gases del Pacífico, Quavii Gases del Norte del Perú, Cálidda and Promigas Peru. And in Colombia, we have distribution of Surtigas, Gases de Occidente, Gases del Caribe and Centrales Energética de Occidente. Besides those companies, we have Enlace, a support services company; Versa, our BPO services; and Brilla, which we already mentioned. As in the Transmission business, our Distribution business is focused on the client and is centered around 4 main principles: first, customer management; second, digital transformation; third, service continuity and reliability; and fourth, a diligent and trustworthy relationship with regulators. I want to highlight the importance of digital transformation and data analytics, who are servicing those 6 million clients with better information solutions, better IT solutions in order to understand the needs, and we have been progressing significantly in that area. I also want to highlight the growth vectors for this strategic segment. We are growing around 3 main vectors. First, our core business. We now have 6 million customers, and we want to keep growing, particularly in Peru, where penetration is low. And this year, in particular, we were able to reach more than 170,000 users in Gases del Peru and the del Pacifico, and we're now connecting 4,000 users. We were able to connect our 4,000 users in Quavii Gases del Norte del Perú. We have also been growing in this line of business through sustainable mobility and through Brilla, which we'll go much more in detail in the following slides. So as I mentioned earlier, we are advancing in the CapEx execution of our business in Peru. By this year, we have invested $70 million, most of which has been devoted to growing our operations in Peru. We have been able to place $63 million, as I mentioned earlier, through Brilla. And here, I want to highlight one thing, how are those $63 million allocated? Well, more than 80% of those credits have been allocated to the poorest households in Colombia. And the important thing is that the loans -- these loans are recoverable up to 97%. Only 3% of those loans are under stress, more than 90 days due. 97% are paid by customers in time. So besides being Brilla, a profitable business or growing business, it has a social component in terms of offering the poorest households in Colombia of the income bracket 1 and 2 with credit solutions. We are taking them out. We're taking them out of the informal black market and incorporating them into the formal credit market, and that's something that we cherish in terms of social responsibility. I also want to highlight that the EBITDA of this strategic business unit, the Distribution business unit, has increased during the first quarter of this year compared to the first quarter of 2021 by 31%. We were able to increase that EBITDA compared to last year by $40 million, COP 147,000 million. This is new for you. We will -- you have been accustomed to take a look to our Transmission business unit, our Distribution business unit, but now we have incorporated this line of business, which is the Energy Solutions and Strategic business unit. You have not seen this earlier in our presentation, but I want to highlight it because this is an area that has been growing substantially during the past year. And as I mentioned earlier at the beginning of the presentation, today, in terms of solar distributed energy, we have 25.5-megawatt peaks of capacity, of which 53% are already in operation, 13.4-megawatt peaks, and 12.1% are under construction. This has grown substantially compared to last year, and now we have 20 projects taking place. That's the value up to the 31st of March. When we come back with the second semester results, you will see how this is growing. We want to end up the year with 40-megawatt peaks of capacity in this area. Regarding auto and cogeneration, we now have 15.3 megawatts, of which 57%, 8.8 megawatts, are already under operation and 43% 6.5 megawatts are under construction. We have 2 running projects in this area. And regarding the operation and maintenance of generation units, we currently have 45 megawatts under operation under one single project. So get accustomed because you will be seeing this strategic business unit growing substantially in the coming years. Now let me move to the corporate aspects. And here, I want to mention that the corporation has established in terms of environmental, social and governance different areas of growth and business. First, from the environmental standpoint, we are carrying out the decarbonization of our business through energy solutions, and we are currently building a carbon neutrality road map. This is something that we will be announcing to the market in the third Q of this year. We are also carrying out projects in terms of biodiversity, and we will see the key performance indicators in this area in the next slide. We have been in the environmental area also on the responsible and sustainable energy principle, developing new sustainable energy solutions of hydrogen, as I just mentioned, and biogases, as we were telling in the innovation section of the presentation. Regarding social aspects in the next slide, we will see how the Promigas Foundation has been working. We were able to deploy $9 million of investment in social aspects during the past year. And this year, we want to move that figure to $10 million of investment. Brilla has a huge social component, as I mentioned earlier. 81% of the allocations of credit during the first quarter of this year were for the poorest households in Colombia, income bracket 1 and 2. We're providing those households with the possibility of advancing in the purchasing of construction materials for improving their main assets, their homes. We're advancing with those poor households on the possibilities of providing them with mobility solutions, motorcycles. And we are advancing with those households in the possibility of providing credits for education. 20% of our lines of business in Brilla are for credits in education. We cherish that. And in the governance aspect, as it was mentioned during the video, we have been able to advance in the implementation of human rights policy within the corporation. And the corporate governance, as Juliana mentioned in the video, we have been strengthening the way we relate with our subsidiaries. Let me move into the social aspects and achievements of our foundation. As I mentioned earlier, we were able to allocate $9 million throughout the past year, and of those, 24% were devoted to the main focus area of the foundation of Promigas. Two areas how we are working: first, youth employment, how to incorporate youth to the formal employment sector; and second, sustainable projects for peasant communities, and we have been working that substantially with the foundation. 29% of our reinvestments are in that area. This is the KPI panel of ESG. In terms of environmental, we invested COP 12,500 million throughout the past year. We had 0 finance or environmental sanctions. In terms of social aspects, we have [ 2,237 ] employees. 40% of those are women, 27% are in managerial positions. In terms of HSE, our accident rate has decreased 18%. And in terms of governance, we have 60% of women in the Board of Directors of the corporation, well above the standard in Colombia. And we had an evaluation of 4.7 over 5 of the evaluation of the Board of Directors. I'm going to give the floor now to Aquiles Mercado, who will go in depth into the financial results of the company. Thank you.

Good morning, everyone. Let me begin by thanking especially all of you and also those attending the event virtually and also our employees in Colombia and Peru that are following this event. Juan Manuel spoke about the consolidated financial statements. In this chapter, I'm going to refer to, what we call in Colombia, individual financial statements, taking into account that, under accounting rules, we should present this but taking into account also that, through equity method, we include all the results of our subsidiaries and affiliates. So the net income would be, at the end, the same than consolidating financial statements. We were able to reach $76 million of income in the first quarter of this year, growing 40% as compared with the previous year 2021. The EBITDA, we reached almost $120 million, growing also 41% when we compare the figures with the previous year. And net income reached almost $100 million in the first quarter, taking into account that we increased the revenues because the volumes transported as well as the exchange rate that increased in Colombia from COP 3,923 per dollar to -- from COP 3,635. This led the company to increase its revenues in 11% compared with the budget we were expecting to meet during the first quarter. The EBITDA, as I mentioned before, reached $120 million, 26% overbudgeted. And basically, this is caused because of the income I just mentioned and also the control that we have in our O&M expenses. The net income reached $100 million, more or less, $96 million, taking into account the exchange rate we used to convert it into dollars. Our functional currency is pesos in Colombia, not in Peru, which is dollars. Also, we were able to perform 26% overbudgeted in the net income. Basically, its caused because of the revenues, we were able to reach the control on O&M expenses and other issues like the [ indemnification ] we received from Reficar because of a renegotiation of the contract we developed with this important customer that has a long-term contract. In our balance sheet, we were able to reach more than COP 2.5 billion -- $2.5 billion excuse me, in assets, basically because of the constructions we performed in previous year, expanding the capacity of our systems in order to be able to transport more natural gas than we were transporting in the previous years. Basically due to an expansion, we performed to transport 100 million cubic feet per day more to some producers in the south of our system. And also, the liabilities. We kept them under control as we have done in the past, taking into account our conservative policy in terms of financing. We reached a consolidated debt of $1.7 billion. And if you see the profile that you have on the screen, basically, we have 70% bonds and 30% debt with banks, long term, basically, the profile. And by currency, we are having, in this moment, 59%, 60%, almost in pesos, basically, bonds issued in Colombia; 38% bonds issued in the States; and Peruvian soles, which we normally take in order to hedge some of the accounts we have to manage in Peru, coming out from our operations in that company. So that's basically what we have in terms of individual financial statements. So it's been an outstanding quarter. We expect to keep performing like this in the rest of the year. So now we will move on with the next steps of this event. Thank you so much.

Thanks, Aquiles. Now we're going to move to the conversation part of the event. And I want to invite my colleagues to the podium so that we can begin the conversation, as Juliana mentioned, with different questions that we'll be chatting about so that you get to know better the company. So to start the panel, we will be focusing on last year's results, achievements and our strategic approach to the energy transition. Then we'll move to the gas sector of Colombia, which is currently our main business, then to the gas sector in Peru. And finally, we'll be closing with what we are doing in terms of ESG and sustainability. Having said that, let me begin with Aquiles and go in depth with last year's results. Last year, as we just mentioned in the presentation, we achieved a net income of $310 million, which represents a 109% execution of our budget. What other 2021 achievements can you highlight, Aquiles? And what are those prospects we have for 2022 in terms of results and investments?

Thank you, Juan Manuel. Basically, based on those results, we have to say that they allowed us to keep debt indicators lined up with international investment-grade levels. We consider those ratings as a main asset in order to be able to finance all our operations and expectations in the next years. Regarding your question for 2022, we estimate to finish the year reaching revenues of almost $1.4 billion, an EBITDA of $100 million and a net income of $328 million. That's an increase of more or less 13% compared to '21 like-for-like speaking, I mean, taking into account that we had some special issues in 2021 that we won't be having in this year. Last, I would mention that indicators, which we foresee we'll keep healthy levels and in line with limits established by rating agencies, again, in order to keep our rating levels of not only local, but international investment grades.

Thank you, Aquiles. Let's focus on strategy. Last year, in 2021, we finished the review of the strategy of the Promigas group. Why don't you give us a little more detail about the last strategic review exercise conducted and what were the main conclusions?

I would say that, basically, the main conclusion is that based on the process we performed in 2020, Promigas will remain a success story, given not only the maturity of the company, I mean, the current maturity, but the new opportunities we intend to capitalize on in the coming years with the energy transition. As you mentioned, we have a new strategic business unit that is growing faster than we expected. One of the main conclusions our analysis reflected is that global demand for natural gas will be resilient over the next 15 years. We have been doing this for the last 47 years, especially in emerging countries, like Colombia and Peru, where we have a strong presence, even in fast energy transition scenarios. In addition to these growth opportunities, we identified and prioritized in basically under 2 fundamental criteria: market attractiveness and ability to win. Those are the 2 factors we were taking into account in order to select what opportunities to pursue. Even more, our strategy also identified the need to intensify diversification, considering that speed energy transition could gain any moment. We don't want to be surprised. So we have to be prepared in order to achieve what we are expecting.

Okay. So you just mentioned the word diversification, and we saw in the presentation that Promigas is diversifying to the energy solutions business. Why don't you give us more detail on what diversification means for Promigas?

I would like to add one word to diversification. We have a story of responsible diversification, being this expression of one of the principles of our corporate strategy review. We're very disciplined. We don't sacrifice growth by return. At year-end '21, 79% of our revenues came from natural gas transmission and distribution in Colombia and Peru, 12% from electric power distribution, 5% from LNG regasification, 3% from our nonbanking financing program and 1% already from energy solutions, which includes, as you mentioned, auto, co and solar generation, which demonstrate focus and, at the same time, disciplined diversification around regulated line of businesses so far. Now if we look forward, we foresee that our future growth will be based on 3 main axes. First, we will be focused by delivering sustainable organic growth through our core businesses, such as natural gas emission and distribution in Colombia for sure, and in Peru, where we are having a strong presence and developing a business that, I would say, that are in the same pattern we follow in Colombia the last 20 to 25 years; LNG, where we seek to maximize the value of our regasification plant in Cartagena, the only one the country has already in Colombia; and hydrocarbon treatment, actively promoting comprehensive solutions for gas producers. The second axis will be oriented or intended to foster our growth in low-emission businesses, including energy solutions to be provided to our customers, such as auto, co and distributed solar generation; energy efficiency services; carbon management services; and green gas projects. Such as hydrogen and biogas. This is complemented or, I would say, more than complemented, pushed by our nonbanking financing business. It's a mature business, but we are expecting much more from it. Brilla, which we seek to take to the next level as a core business through our digital transformation. Last but not least, let me say this, our strategy is to promote growth outside of Colombia, allowing for the diversification of revenue from outside of our natural markets, always maintaining the credit ratings we currently have, while keeping healthy dividends flows to our shareholders.

Thank you, Aquiles. So from the strategic standpoint, we'll be growing our core business jointly with the low emissions business of energy solutions that we want to grow on further ahead. If we were to think of goals in terms of countries where we want to diversify, I'm going to switch here to Wilson, what are those goals? Which countries are we targeting for that diversification process?

Good morning, Juan Manuel, and everyone who joins us in this event. As I want to be very precise with my answers and explanations, I would prefer to speak in Spanish for a moment. [Interpreted] [indiscernible] We acquired the Transmission and Distribution businesses, natural gas and the LNG. As targets, we are considering the United States, Brazil and Chile, among others, countries that offer fantastic business opportunities. Likewise, as you said, Juan Manuel, during your presentation, we're also actively exploring other opportunities of business, such as electric power in Colombia and other countries in the region.

Chile, Brazil, our target markets. we're focusing in diversification in electricity distribution, energy solutions. Let's go in detail of what we mean by developing low-emission business, such as energy solutions. Why don't you tell us, Wilson, what that means, specifically?

[Interpreted] At Promigas, we understand that energy solutions are key, and it's a fundamental aspect to support our clients to move towards lowering emissions and having much more efficient consumption. Nowadays, we have a business unit of energy solutions that's fully dedicated to energy solutions. And from this unit, we offer a broad service portfolio and products that are designed and then really fit the needs of our clients. Our goal, and I reiterate this, is to support them in this energy transition towards zero emissions, decarbonization. Our energy solutions go from distribution energy, cogeneration, also our self-generation, efficient mobility, energy efficiency and centralized solutions for heating, for instance. Nowadays, we have 26 megawatts, as Juan Manuel was mentioning, from solar energy. That's distributed more than 100 projects in more than 14 departments in Colombia, 14 provinces. Additionally, we have more than 15 megawatts in terms of cogeneration and self-generation of power. We operate and maintain more than 45 megawatts.

Moving part of our business to energy solutions, and you will be hearing more of that in the coming years. I want to focus now our attention in our core business, the natural gas sector and, in particular, by addressing the most pressing issue that our sector is having in Colombia, which is related to the potential supply deficit that Colombia might have during this decade. Some analysts predict it will be 2025, other analysts, 2026. Three weeks ago, we heard from the government that the reserves of the country had moved from 7 to 8 years of reserves. Let me bring into the discussion, Ricardo. And I want to ask you, Ricardo, given that the country is undertaking exploration efforts, onshore and offshore, for finding new gas supply alternatives, what options do these possible exploration efforts bring to Promigas in order to attend the gas deficit? And what role can SPEC play in this discussion?

Thank you, Juan Manuel. SPEC not only has an opportunity but also has a responsibility. This responsibility comes because this is the first and only terminal to import LNG to Colombia. And it's the only terminal that will be on time to meet this forecasted deficit. In that sense, we are evaluating the expansion of SPEC in 2 phases. The initial phase is going to be 50 million cubic feet per day, which is intended to be ready by 2024, '25 and, if needed, depending on the gas exploration success from year 2026, the second expansion, that is up to 600 million feet per day capacity.

Thank you, Ricardo. It seems SPEC has an exciting potential. So what investments are needed to undertake these expansions?

Given the current infrastructure that we already have in the FSRU and in the terminal, and because of the proximity of this terminal to the national transmission system, our transmission system is just 10 kilometers away, the investment -- the expected investments should be reasonable, very low. But we will be announcing that once we finalize all the technical analysis very soon.

Okay. So we were planning on a 2-phase expansion of SPEC. And let me bring back Aquiles to the conversation. How are these expansions incorporated in our long-term projections?

Yes. Actually, we are constantly in touch with Ricardo's and Wilson's strategic business units. And therefore, in this case of SPEC, we keep on monitoring and forecasting different scenarios of the projects. So we have sets of projections departing from a base case scenario, and we deeply analyze short- and long-term outputs coming out from those scenarios that we are constantly running. So of course, this project, I mean, talking about the expansion of SPEC, the implication on any of the phases that Ricardo mentioned has been deeply measured and tested. So on the top of that, we keep on speaking with rating agencies in order to keep them informed about decisions and businesses under analysis. In this case, we are speaking about the LNG plant expansion. And the main conclusions we come up with is that we are able not only to finance the expansion plans in the first scenario, let's say, or the second one, the largest expansion. We still meet the requirements that the rating agencies are posting on Promigas in order to keep our investment grades.

Okay. So from Ricardo and Aquiles, we can conclude that SPEC definitely is a strategic project for the country. But I want to bring Natalia into the discussion to tell us, not only from the strategic financial standpoint the benefits of SPEC, but also from the environmental standpoint. So Natalia, what environmental benefits has SPEC brought to Colombia? What can you tell us about that?

Thanks, Juan Manuel. This is an important question within our sustainability, strategy and our commitment to climate change mitigation. With SPEC LNG, we -- as has been mentioned before, we are the only terminal that is in Colombia, and we are assuring that a cleaner electricity generation compared to that was generated with diesel plants. For each kilowatt that is generated with natural gas compared to diesel plants, we are reducing the carbon footprint in 30%; and in 99%, the particulate matters. So LNG is definitely a strategic asset and investment in Colombia, and it helps us to contribute to our sustainability in energy generation in our country.

Thank you, Natalia. I want to move the discussion now into the transmission of natural gas. And Ricardo, considering that we're looking to increase local gas production in the country through exploration efforts in conventional and unconventional resources, what are the steps we are taking to prepare us all in terms of transmission infrastructure? How can Promigas take advantage of these efforts that the country is undertaking in exploration of conventional and unconventional resources?

Currently, we are working in 2 relevant projects. One is the so-called bidirectionality project by the OMME. This first project, initially, it's meant to bring gas from the west side of Colombia up to the north side and then connected to the central system to bring the gas to the central markets of the country. This project is -- it's designed to have a capacity of 170 million cubic feet per day. That will achieve 85% of the forecasted deficit of the central -- the interior markets of Colombia. It's worth mentioning that this project is already approved by the OMME, it's certified by the OMME, and we already submitted the tariff files to the CREG. And we expect that this expansion of our capacity will be ready by the end of 2024, first semester of 2025. The second project we're working on is the connection from our last part of the pipe in the south of the North Coast, connecting the lower Magdalena Basin, gas fields, in Jobo to our system -- transmission system in, call it, Transmetano. And with this project, we will interconnect this gas to the central grid system also through Transmetano. And we -- with this project, we will close the loop, bringing, of course, reliability to the country. This is -- these are 2 very strategic products for Colombia because they will bring not only reliability but total interconnection between the main gas fields and also the LNG terminal. Promigas, it's ready, and it's the most suitable company to develop these projects.

Thank you, Ricardo. So let me wrap up where we are now standing in the discussion. Aquiles was mentioning a strategic growth around 2 axes: energy solution alone, carbon emissions; and the growth of our core business in natural gas. Within the growth of natural gas, Ricardo has spoke of 3 different projects. First, the expansion of our LNG terminal under 2 phases. Second, the expansion of our transmission business under 2 different projects: the bidirectionality, as he just mentioned; and the possibility of closing the loop with Jobo-Antioquia, which is a project we're participating, and we are expecting to be able to win probably before the end of the year. Those 2 projects that Ricardo just mentioned do not only entail the growth possibilities, but also entail a lot of challenges from the technical and social standpoint. So let me bring Alejandro into the discussion. What are those technical challenges that the bidirectionality project and that the Jobo-Antioquia project bring into the table?

Thank you, Juan Manuel. Indeed, these projects are very important for the transmission system in Colombia. In terms of the bidirectionality project, we can say that we have good advancements in the basic engineering and the conceptual engineering of this project. We have made the hydraulic simulations, the flow simulations, the noise analysis of the stations, the pre-dimensioning of the equipments of the -- like turbines and compressors that will be installed in these projects. About the connection between the 2 pipelines, the Promigas pipeline and TEI pipeline in Ballena, we already made the detail engineering. That means that we are most than ready to start the construction and the operation of this connection that, as Ricardo says, is very, very important for our country in order to interconnect both systems. And about Jobo and Antioquia, we have made whole the full conceptual engineering, and we have made also good advancements in the basic engineering. We already made the flow of the system, the flow simulation of the system and defined the right of way of this pipeline. We've actually done the hydrological, and they made river crossings studies for these projects. That is a critical section of the project. And we also made a legal diagnosis and appraisal of the properties that are located in the layout of the pipeline. That means that we are very advanced in those 3 projects of the system. And I want to highlight that we are ready, as I said, with the 3 projects in order to start as soon as we receive this proper place -- signal from the clients and the regulator in order to put the operation of these 3 projects.

Excellent. So -- but for the OMME project of bidirectionality, we have already received the signal from the regulator. And that's a project that will definitely take place. While the Jobo-Antioquia, we're comparing for that.

For the client.

That's important to make that clarification, both projects. Until a lot of social complexities, Colombia has been characterized mainly by a lot of aboveground issue problems: environmental licenses, community management. So I want to bring Natalia back into the discussion to speak about these social strategies that we are advancing in order to be able to execute these projects. Natalia, what can you tell us about that?

Juan Manuel, we are very aware about the high impacts that social and environmental matters have in our operations. So we strictly follow plans that take into consideration all the possible impacts, possible social and environmental impacts. And we have a clear stakeholder engagement plan thinking in a long-term relationship that seeks to improve our community, the policy of life of our communities, but also that help us to identify the expectations, the needs, their concerns, and to determine, in consultation with them, our contribution and the appropriate solutions. Among the benefits of our projects, we can highlight that 100% of the unqualified workers comes from local communities, and between 30% and 40% of the qualified workers also comes from the local communities. And it is very important to mention that we work especially with Afro descendant, with indigenous and with rural communities. In the past 5 years, we have carried out 45 prior consultation processes and make contributions for a total amount of $2.5 million, most of which have been directed to cultural strengthening projects, to purchase land in order to protect their ancestral territories and to improve and satisfy basic needs of the communities. So we worked with -- as we work especially with the communities, we -- it's a complex situation. Indeed, it's a complex situation, where Promigas has been very successful in building trust relationship that allowed us to have a license to operate and be confident in order to construct our projects.

So if I were to conclude in this section, we will be ready from the technical and social standpoint to execute the bidirectionality project, the SPEC expansion. And if we were awarded, the Jobo-Antioquia project, we will be ready from the technical and social standpoint. Aquiles, from the financial standpoint, are we ready to undertake those projects because we have means? But how many -- how much resources will that entail? And how -- are we considering those projects within our projections?

I have some friends here that are willing to lend the money. Let me introduce you to them. No, no, seriously speaking, we are now speaking about much more relevant for you. We have -- we need about $500 million, more or less, as we have been estimating. But we have also mentioned the potential impact of this project on our financial statements and metrics by running sensitivities along with all projects we have in the pipeline. We are testing, and we are making like a stress analysis to our metrics, taking into account not only this project, but the ones we are -- spoke before. In the recent past, we have been able to finance all our projects through credit lines, not only with local banks, but international banks, as the one we have present today here, and also through the international and local capital markets. Taking into account the nature of the project we're talking about, Juan Manuel, we think the most suitable structure would be through bridge loans because we have to build. Between 3 and 4 years, we will be constructing. So issuing a bond, for example, will take an important negative carry during the construction period. So we are planning to take, again, bridge loans and then, afterwards, replace them with a long-term takeout once the operation has started. We have currently more than $1 billion available through credit lines with local, international banks and a program for local bonds that are ready to be issued in Colombia once we are ready to start operations. Of course, we could reach high levels of our debt ratios since we will have to invest before receiving EBITDA. We will be constructing again during 3 to 4 years, putting money on the infrastructure. And then we will be prepared to receive EBITDA back once we start operating. We have been in touch -- deeply in touch with rating agencies in order for them to know the structure of this project. With these deals, we have done that -- this in the past. Like for example, in the 2020 and '21 when we constructed the 100 million cubic feet per day for one of the most important local producers of natural gas in Colombia, we reached important debt levels. And once gas start flowing, our EBITDA start flowing as well. So deleveraging again, and we reached at the end of the past year less than 3.6x debt-to-EBITDA. So we are prepared to perform this project, to go ahead, to construct and to operate it afterwards.

Thank you. So that's in terms of growth of our Transmission business. What about our existing assets? And I'm going to bring here the regulatory discussion into the floor, mainly because last year, the CREG, our regulator in Colombia, issued the new transportation, transmission methodology for tariffs for the Transmission business. Aquiles, can you expand on when the new WACC is going to be implemented? And what can we expect in terms of that tariff regulation?

Yes. Taking into account the most recent resolution from our regulatory body, the WACC will be recalculated in September 1, and we will have to apply the new tariffs from that day on. The current regulatory framework proposed by CREG is oriented to promote investment in transmission infrastructure, Juan Manuel. So if we consider variables widely used in order to calculate WACCs for our business, we're speaking here about transmission, you will end up today with a rate of return of 11% real before taxes. Let me repeat this, 11% real before taxes. That will be more or less the WACC we will obtain after applying the methodology that CREG has issued. Definitely, this is a WACC for and aligned with macroeconomic conditions of our country today. So we are ready, again, not only to keep on doing what we know how to do, but also to expand our systems using this WACC to remunerate our investments.

Thank you. I want to bring the new -- the other strategic business units into the discussion. As we were taking a look in the results that we presented, we have a very balanced result between the Transmission and the Distribution business in terms of almost 50% of the EBITDA and 50% of the net income comes from each of these lines of businesses. So Wilson, we achieved a milestone of 6 million users. Why don't you tell us about the Distribution business in Colombia? Your thoughts with regard to coverage of natural gas distribution in Colombia, what can you tell us?

[Interpreted] Juan Manuel, Promigas, through its natural gas distributors in Colombia, sells close to 4 million users. The 4 million users are served in almost 900 population centers in Colombia. While today, we have a high coverage of service close to 92%, in 2021, we conducted over 136,000 new users, representing an additional growth of 18%. In 2022, we expect, and that's on goal, to reach the service coverage of 93%, thus benefiting 4.1 million users. Then the demand for natural gas in 2021 experienced a big growth, and we reached numbers close to the numbers in demand that we had pre COVID, in other words, in 2019. We had close to [ 3,900 ] million cubic square meter of sales in 2021, which represented growth close to 13%. The results, as Juan Manuel showed during his presentation, most definitely reflect the capacity we have to have sustainable growth while we increase coverage of our service in our markets. And at the same time, we provide high-quality and trustworthy service.

And previously, I mentioned that we are now serving [ 63,000 ] in Peru. Let's hope we can move that number in Peru to a bigger number. And as I mentioned earlier, we have recently been -- the regulation for transmission was recently issued in Colombia. We have also advanced this in terms of the regulation for distribution and commercialization. So Wilson, what can you tell about that?

[Interpreted] Juan Manuel, in terms of the advances we've had for -- this has been a really very good year for distribution. Distribution companies of natural gas came to the regulator in 2020, giving them all the information that they needed for the tariffs in order to approve them. At this time, we are waiting for the commission to publish a resolution and decisions, specifically defining the distribution charges that will be in force for the next 5 years. We then expect the specific resolutions with these new charges would be published at the end of this month. In terms of energy commercialization, we've made good progress as well. A month ago, the regulator issued a remuneration methodology for the business of -- the trade business. So we expect that these new charges could remunerate -- compensate our sale activity. We'll begin its compensation in 2023.

During the quarterly results presentation, I was mentioning that the client is our focus. And bringing to the client different kinds of solutions is part of how we service them. One of those solutions is Brilla and, specifically, the possibility of providing a service of nonbanking financing alternative to these clients. Why don't you tell us how Brilla has become as an important tool for servicing customers in the Distribution business?

[Interpreted] For us, Brilla, Juan Manuel, is a matter of pride. Brilla is one of the most important leverage growth for the Distribution business. This is an example of Promigas' innovation to meet the needs of our clients. This is not new. Brilla was born in 2007, for 15 years. And even before we saw the development of [ Fimbank ], Promigas had already structured a nonbanking finance business that was focused on giving credits to families that were in the lower income sector. For 15 years now, we've brought and given credit to over 4.1 million families for $1.5 billion . And that's why we say Brilla is a social inclusion platform, which also allows us to increase customers' loyalty and increase profitability through credit alternatives, micro insurances or assistance. Brilla customers have access to our services, credit services or assistance or micro insurance services through different platforms. Most importantly, the products and services that you can have through Brilla allow people to improve the quality of their life and also the increased progress in their benchmark. Because remember that most of our customers in Brilla come from the lower income portion of the population, approximately 95% of our clients. We have more than 760,000 customers, and that means that we have a portfolio of over $320 million at this time. Also, this is 15% of the EBITDA of the Distribution business, but there are challenges. The market has challenges. There is competition. The challenge to grow our business fourfold -- our Brilla business is through digital transformation. Brilla is developing a digital platform, which would allow us and allow our customer to access products and services for credit, assistance, micro insurance and allow us to strengthen the relationship we have with our customers to be able to evolve the business. I'm sure, Juan Manuel, that this is one of the greatest leverage for growth.

I'd like to reference [indiscernible] starting with fintechs. Mainly because Brilla has been in the market for 15 years now, so a very mature business. We have more than 760,000 clients. We're placing $300 million per year. And 95% of our clients are in the income brackets 1, 2 and 3 of Colombia, mainly poor households. This brings into the discussion -- I want to bring Aquiles back. Brilla's portfolio, how secure is it if it's placed in these income brackets?

Yes. As Juliana, our Investor Relations Officer, mentioned in her video regarding how well we performed during pandemic, we learned first in the natural gas side that our business is resilient because we experienced some hard times. But in the case of Brilla, we had a strong challenge. We had 5 million to 6 million families to take care of, 90% of which belong to the very low income brackets of Colombia and the main user of Brilla. We have to take care of how can they pay not, only for the utility, but also for the credit they already had. So no doubt, 2021 was a year of economic recovery, which allowed Brilla to boost its credit placements and increase its portfolio by 35% from the prior year. Then together with robust comprehensive collection management, we were able to go back to a normalized past due portfolio at 90 days of only 3.5%. If you compare this figure, Juan Manuel, with other reference of formal banking, consumer loans, such as credit cards and micro credits, you will find that they are currently about 9%. So you can see that Brilla maintains portfolio quality levers lower than similar financial products in the market, reflecting the loyalty our customers have with the product we are offering to them.

I would say, higher-quality portfolio.

Higher.

A much higher quality of portfolio because it's only overdue of 3.4% compared to 9%.

Right. Right. Also, our credit allocation reached an increase of 113% compared to the previous year, achieving a relevant figure of $340 million, as you mentioned in your presentations, thanks to the implementation and development of the growth strategy developed for the business model that Wilson is managing. And at the end of the 2020, I couldn't finish my introduction without mentioning that we launched the Brilla business model in the north of Peru. We are starting doing the same we have done in the last 15 years in Colombia in Peru, beginning operations in our natural gas distribution company, Quavii, in the north of Peru, one of our main concessions there. We completed the first year of execution, and we exceeded expectations, definitely demonstrated the great potential that this inclusive model has in Peru, as it has been in Colombia. People is taking the credit, paying timely and demonstrated that they are very grateful because somebody is trusting them, not the banking because they don't belong to the banking system -- to the formal banking system. So we are trying to bring them to the formality of a normal credit rather than a black market.

Thank you, Aquiles. Wilson mentioned that 95% of our customers in Brilla are from the income brackets 1, 2 and 3. Natalia, how is Brilla perceived from the sustainable point of view?

As Wilson and Aquiles mentioned, Brilla is a responsible and sustainable energy business that contributes to the wellbeing of the Colombian and Peruvian clients that were subscribed to our gas and electricity service. So this is a perfect example of how our sustainability strategy is perfectly aligned with the growth strategy and diversity strategy. So through Brilla, we are directly impacting social inclusion to unbanked people that -- by enabling them to have access to formal credits. As you have mentioned, 95% of our customers are classified within the lower income groups that do not have access to the formal banking system, and Brilla can provide them these credits as low as $25. And -- but the average of the credit is $500 and the maturity is about 28 months. Brilla has placed, in the 50 year that it has been in the market, more than $4.7 million of credits that represents a total placements of more than $1.3 billion. And with Brilla, we also promote equality because we have equal opportunities for our clients, regardless their gender, the disability, ethnicity, religion. In fact, today, 56% of our clients that takes the credit are women. And so in conclusion, the long-term benefit of Brilla for our clients are reflected in an improvement of their quality of life through better access to education and technology, for example, with the possibility to additional incomes that come from the financial of their assets and also with savings in financial expenses.

Thank you, Natalia. Earlier this morning, we were mentioning that Promigas has executed a big part of its CapEx this year in Peru. And I want to bring Peru into the discussion, particularly in the Distribution business. So Wilson, Peru is a country with a large number of reserves, mainly coming from the Camisea field, which is why we believe it has a great potential, and we are developing it through our 2 concessions and our noncontrolling stake in Cálidda. With this in mind, can you -- what can you tell us about operations in Peru, specifically in terms of the massification plan?

[Interpreted] Juan Manuel, Peru is a country with huge potential in terms of natural gas growth. And this is corroborated when you take a look into the coverage of gas supply. Only 17% of the population in Peru has access to natural gas. Undoubtedly, Peru, with its huge reserves of natural gas for the past 24 years has showed great potential. In those reserves are the main vector, so we can carry out the massification in the country. The massification we got to Peru in 2007. Since then, we've been committed to gas massification in the country. And this is illustrated by the fact that we service 24% of the country. And out of those users that have access to natural gas, and we're benefiting and servicing 1.5 million clients -- customers. During 2021, our sales reached 8 billion cubic meters. This represents an 8% increase compared to the volume for 2020. Nowadays, we have investments executed worth $130 million. And for the next few years, we foresee forecasting another $120 million additional that will reach $1 billion on our side. Last year, there were some relevant milestones in Peru. Firstly, we had an early operation of the Piura concession from the Peruvian government in 2019. And when I call it early operation at Piura, we are operating 1 year earlier prior to the deadline established by the government. During 2021, we were able to carry out this project. The construction was 80% finished. We've been able to meet all our commitments and fulfill all our commitments in terms of coverage in other cities at the other concession called Gases del Pacifico. 2021 was challenging, but also showed great milestones and was historic for us in Peru.

Thanks, Wilson. And Aquiles, how are the investments mentioned by Wilson considered in our budget? And how we're going to finance them.

Every single year, when we are starting to prepare the budget, Juan Manuel, we prepare through our financial resources management run by Fiorella Frieri, which is here with us, the comprehensive financing strategy for the year. And in this plan, we take into account not only our needs, I mean, Promigas, but the consolidated corporate cash requirements. And we are speaking here about 23 companies that are going to need cash, that are going to need loans in order to be able to finance the requirements. And also, we take into account 4 main criteria in order to be able to finance properly the financing. First, warranty corporate cash consolidated requirements, as I mentioned; two, obtain the market the best market conditions; third one would be access sustainable financing alternatives; and also minimizing currency risk through a mix of natural hedge and hedge accounting and also derivatives when we have to use them. It's worth it to mention that in the case of our subsidiaries in Peru, which we are talking about, its functional currency is dollars. So we can use dollars in order to finance our operations there. So there is no exposure to exchange risk. And at the same time, we managed to get loans in Peruvian soles in order to hedge the accounts that are coming out from the operations in that country, such as consumption, bills, promotion margin, local taxes and other. We have to mention again that we have credit lines available, not only through banks, local banks, international banks, but also bond programs that, if we add them, we can reach more than $1 billion that provide us with a solid platform in order to support our growth we are expecting to face in Peru this year and in the next 2 to 3 years.

Thank you, Aquiles. Natalia, it is evident that political uncertainty exists in Peru. Tell us a little about this issue and how we have been developing a relationship with the government.

Yes, Juan Manuel. Although the Peruvian political environment has been challenging, our relations with the government and the regulatory bodies has been on a normal basis -- has been developing on a normal basis. The government plans related to the wide spreading of the use of gas in Peru are aligned with our projects and was -- in this country. Indeed, last year, the actual government extended the FISE fund in our concessions in the north of Peru. It means that the government is funding the costs of the connection for new customers -- of the gas connection for new customers. And we have -- that there have not been regulatory changes in -- regarding our business. And so we don't have any indication that the position of the government will change. As of today, we have been working normally, and we have important advancements in our gas pipeline project in Piura. So we consider that the risk is low regarding any state action contrary to our investments, such as expropriation or drastic legal effects. And in addition, it should be noted that we have constitutional, legal and contractual rights and protection against the main risks associated with our business.

Thank you. And Aquiles, how are the credit rating agencies viewing our investments in Peru?

As we mentioned before, we keep in touch, currently, I would say, once a month with the 2 agencies we are working currently. Promigas' international rating, that is above our sovereign or Colombia's rating, the current. And our strategic long-term investments in Peru are a plus in this output since Peru's sovereign rating is investment grade. So this is an upside we have -- we get when we are investing every single dollar in Peru. It is important to remember that 11 years ago, when we obtained our investment grade, Colombia didn't have it already. So -- and then when Colombia lost it again in 2021, we were able to keep ours. So we think this is an outcome that would come from the mix of investment in Colombia and the diversification we have -- we started back in 2007 in Peru. In the meantime, Peru has kept its investment grades as well by Moody's, Standard & Poor's and Fitch. So this is, I would say, a quality investment country still. Now rating agencies are constantly monitoring the situation in Peru. And as long as the country maintains the investment grades, taking into account our conservative and disciplined investment policies as well as the knowledge we have deployed developing the business in Peru, as we have done in the past in Colombia, we think that we can keep our investment grades. There is a strategical asset we take care of because we know this is the credential we can present to banks when we are looking for proceeds in order to finance our operations. Important to mention that, in Peru, the rate of return for investment in distribution has been 12% real before taxes for more than 25 years. So this provides stability and further remuneration to this activity that we are performing in that country. Also, we have worked -- since we entered in Peru, we have worked along with the governments, different governments that we have interacted with in order to support the objective of the government to improve the quality of life of the Peruvian through the widespread use of natural gas. And we are now concentrated, focusing our activity in the new concession we have in the north in order to reach all the goals that we have set. And we have invested in the past 3 years more than $350 million. And we are prepared to invest $150 million more in the next 2 to 3 years, ratifying the commitment and also the trust and the confidence we have in this country, Juan Manuel.

Thank you, Aquiles. I want to devote the last 5 minutes of the conversation to ESG and innovation matters before we open for Q&A, 2 questions from the audience. So Natalia, in terms of ESG, could you quickly tell us how we're working on to generate a positive environmental legacy and offset our carbon footprint?

Yes, Juan Manuel. Let me begin by highlighting that we expect to consolidate our position as sustainability leaders by 2030 in the countries that we operate and to be recognized for leaving a positive legacy -- environmental legacy through decarbonization and biodiversity initiative programs. First, and regarding our decarbonization efforts, this year, we will be launching our net-zero strategy road map within goals by 2030 and 2050. And we also will share our first task force on climate report in order to disclose high-quality information on the impacts of climate change. In the decarbonization area, and as has been mentioned at the beginning in the conversation, we are closely working with our clients or our customers and providing them energy solutions to help their decarbonization process. This year alone, we're investing $35 million. That represents 14% of our budget. And we are also advancing, as has been mentioned, and Alejandro told before, pilot projects associated with hydrogen and biogases. And second, regarding the protection of ecosystems. For several years, we have been working to preserve the tropical dry forest. That's one of the most threatened ecosystem in Latin America and which is present in most of the areas where we operate. Our investment for biodiversity last year was $3 million. And up until today, we have contributed to the rehabilitation and restoration of 600 hectares of natural reserve areas. And we are committed to plant 1.5 million trees in order to contribute to our net-zero strategy and also to the biodiversity strategy. And for closing, I could mention that we obtained a very important and valuable score for us in the environmental management section of the Dow Jones sustainability evaluation, achieving 83 points. that result is above of the emerging markets and very close to the best result on record.

Thank you, Natalia. And what about the S component of the ESG strategy? What are the goals that have supported progress made in the communities where we operate?

Yes, we have several strategies and mechanisms to social impacts for communities. We talked before about the social impacts in our projects and operations on how to -- how we develop plans in order to achieve the license to operate. Also, we mentioned earlier a responsible and sustainable business, which is Brilla. So I'd like to mention now that part of our commitment to contribute to the social progress of the communities is taking -- we made it through our foundation. Last year, Promigas invested more than $9 million in social programs executed or determined by Promigas Foundation. The beneficiaries of this high-impact strategic social management are more than 19. And if we consider a specific humanitarian aid, like COVID and other donations, last year, we would benefit more than 200,000 people. And for the upcoming years, we are increasing this investment in this year in 15%, and we are expecting to set this goal for approximately $10 million in social investment per year. In 2021, we defined the strategic lines of investments of our foundation and merged all the foundations of our subsidiaries in one. So we have a single and strengthened foundation, which allows us to have more impacts and to have a decrease also all our investments. And just to end, I will say that our programs are focused and around 2 specific areas: education for employment programs and Juan Manuel mentioned in the first intervention that we seek to close the gap between the education level of our youth and the needs of the market. And the other projects, and we are focused -- or area where we're focused in the sustainable productive projects, how we help our communities to be entrepreneurs and also to develop income generation projects, helping them develop in the local business and to help our supply chain so they have -- can have a better quality of life and better income.

Thank you, Natalia. Last, Alejandro, let's speak about innovation. We have a Center for Research and Innovation in Energy and Gas called CIIEG that worked thoroughly on the hydrogen project, biogases. What can you tell us about CIIEG and the project it's working on?

Yes, Juan Manuel. Actually, as you said, CIIEG is our center for research and innovation in energy and gas. We start -- or we began operations in 2016. And from this center, we articulate the innovation efforts from the old subsidiaries in the company. It's like an ecosystem that we create with this CIIEG. And the most important is that we try to find synergies to develop strategic research projects through the CIIEG and the companies. In 2019, we launched our corporate innovation strategy that is -- that was based in 3 objectives: first, diversify our portfolio of services and products in order to add value to our customers; second, decarbonize our business by achieving more sustainable operations and develop net-zero or low emissions products and practice in our corporation; and three, achieve operational excellence. This last goal will be achieved by adoption by solutions and technologies that can enhance our efficiency, safety and flexibility in our operations in all the companies.

Thank you, Alejandro. I'm going to close by mentioning that we -- during the conversation with our Vice Presidents, we were able to speak about the results of the company, its achievements, our strategic approach to energy transition; how we are viewing the gas -- the natural gas sector in Colombia, in Peru; what are our main current lines of businesses. We gave some forward-looking statements. And finally, we closed the discussion with ESG and innovation matters. Thanks a lot for listening, and I want to open the floor for Q&A then. Thank you.

I think we have a first question, Aquiles, from the audience related to, if you could please repeat the 2022 guidance provided for revenue, EBITDA and net income, and if you could confirm if these are individual or consolidated figures.

Those were consolidated figures, Juan Manuel, and I'm going to go again on the figures. We're expecting taking into account the budget approved by the Board to reach $1.4 billion in revenues, an EBITDA of $500 million and a net income of $328 million.

Thank you. Our second question that we received from the audience is related to -- if we have considered issuing new shares as a strategy to capitalize the company, reduce leverage or attract new investors.

Actually, this is a decision that should be taken by our shareholders. When we prepared the financing strategy, we do consider issuing shares, again, because it's not a management decision. So we don't have that in the plan currently, Juan Manuel.

Thank you, Aquiles. Our third question, Ricardo, is related to when we expect to hear from Canacol's new pipeline project and if we -- if the connection between Jobo and Transmetano makes sense even with the additional capacity that Canacol's pipeline could provide.

Well, Canacol has announced that they are going to make a decision on June this year. So we are waiting for them to announce that. And the second, I would say, the objectives of the projects are to bring, as I said before, natural gas from the lower Magdalena Basin to the interior to serve the Antioquia market and also the -- there's enough gas to also bring us to the interior to the central part of Colombia. So this is a very important project that both companies are looking to finalize and complete, but it's kind of the same objective.

Thank you, Ricardo. Aquiles, there's a question in terms of if we know -- or if we have any medium- and long-term financial goals, specifically in revenues, operational margins and leverage levels.

Actually, we do. As we mentioned during the presentation, we have a set of projections, different scenarios. We are more than open to share with the people that are interested in knowing what are we thinking about the future. So I would say that if they can get in touch with us through the investment relation office, we can set a meeting and share with them all our scenarios on [indiscernible] in order to extend speaking our different scenarios and long-term projections.

Okay. And our last question before we open to the floor to the audience present here. Ricardo, there is a question online related to if we could provide the amount of the indemnization received from Reficar during the quarter and elaborate about this. Aquiles?

Yes. Just a brief introduction. We had a previous contract with Reficar that allowed them to transport 90 million cubic feet per day. They wanted to go down to $70 million -- excuse me, million cubic feet per day, taking into account the load factor of the refinery. And then they approached Promigas in order to do that. They had to pay $8 million. They paid that between January and February in order to be able to change the contract, and also they extended the tenor or the term of the contract. So that was an open negotiation. Going back straight to the question is $8 million they paid.

Sorry how much?

$8 million as an indemnization.

Perfect. So Paola, Maybe if we can administer questions from the present audience.

[Operator Instructions]

Paola, I would like to start by thanking Promigas and the whole management team to [indiscernible] okay, for hosting us today. Maybe a question a little bit related to the Promigas operation itself. I think we are following what's going on in the world, right, with the invasion to Ukraine and the whole change in the dynamics of the whole gas market and LNG market. How do you see -- since you are the experts and you have the only asset that connects Colombia with the rest of the gas market in the world, how do you see the change in the Colombian energy market or the matrix, if any, into Promigas businesses itself?

Yes, that's a good question. I think the Colombian gas market is not fully connected to the international markets, except through the LNG regasification plant. If we take a look to contract some gas prices within Colombia, we see a disconnection to what has happened with the international gas price. Gas prices in Colombia are in the order of $4.80 to $6 per million BTU on average. Thermal plants are contracted. And so we have not witnessed a huge impact from the international LNG price market. I don't know, Ricardo, if you want to complement or...

No. The high prices that we are experiencing from LNG just affected the cost of the generating electricity for restrictions. So the cost of restrictions are not that high that affect the energy prices for the end users. So that's the effect on prices is not that high in Colombia, I would say. I don't know if that answers your question, [ Manuel Fernando ].

Any other question?

Okay. So thank you to everyone. Do we have -- is there a question? Sorry, apologies.

Question on your CapEx program. So you talked about 3 major CapEx plans that you have. So what is your CapEx spend at the end of this year and next year? And how do you plan on financing that?

Yes. This year, we have a CapEx of -- we announced a CapEx of COP 930,000 million. Of those, mostly are devoted to investments in Colombia. And in Peru, we have a CapEx of COP 136,000 -- COP 140,000 million to Energy Solutions and the remainder to our core business. How do we plan to finance that? Aquiles, if you want to go in detail.

Yes. As I mentioned before, we have already all the lines in place without taking into account the projects that we are expecting to appear in the new scenarios like Jobo Transmetano project, for example. But the ones that Juan Manuel mentioned are -- has been taken into account in the budget of the year. So we have, again, credit lines with local banks, international banks. And we have a bond program already approved by authorities in Colombia to issue $250 million. So we have -- if we add them, you will reach like $1 billion ready to be disbursed for Promigas in case we demand from these sources.

And of the -- specifically of the COP 932,000 million of CapEx, COP 752,000 million are in our organic traditional transportation and distribution of [indiscernible] business while COP 180,000 million are in what we call low emission businesses. Energy Solutions, COP 80,000 million; Brilla, COP 6,000 million CapEx investments. Energy distribution of electricity, it takes a small chunk, and green gases, we're doing some pilots for COP 3,000 million.

And we are speaking here about the needs of the 23 companies that belongs to the holding the company manages.

Correct.

We have another person over there.

I'm new to the story, so I was wondering if you can explain a little bit about [ Brilla ] business. You have been talking about the credit business, even the word fintech has been mentioned. So what are the synergies with your core business? And why is this an important pillar of your strategy going forward?

Thank you for the question. It's a critical part of the distribution business, Brilla, mainly because -- we have 6 million customers that on a monthly basis, receive an accounts receivable and invoice with the cost of service, seeing them with electricity and natural gas. And we take advantage of that aspect, providing them this non-banking financing alternative. That's why the collection rate of those credits, it's very low because people pay their services of natural gas and electricity together with the nonbanking financing credit. And that's a very close synergy. And that's Aquiles was mentioned in the collection rate that it's -- the overdue rate above 90 basis and 3.8% on average. And it has become critical for our distribution business in terms of that 15%, 1-5 percent of the EBITDA comes from Brilla. And we are allocating currently on an annual basis, $300 million on average on credits to these customers. The interest rate charge are very attractive. They pay them thoroughly and in time. And so it's a very profitable line of business, and it has a great social impact, as Natalia was mentioning earlier. Between 30% to 40% of those credits for the household needs in terms of construction materials, improving the walls of the house by painting the floors, adding a room, improving the bathrooms. So we improved the main asset that the households have, which is their homes. The second line that we implemented in Brilla is related to mobility lending for motorcycles. Everyone has the aspiration to have an independent source of mobility. Motorcycles is one of them. And we are spending around -- in terms of the credits, 20% of the credits go to that to 30%. And education takes 20% to 30% also.

Any other person? We are good?

Excellent. So thank you very much. I think we are on time. It's already 11.05 a.m here in New York at 10:05 a.m. in Colombia. Thanks for joining us for those connected online or virtually. Thanks a lot for participating with the questions and listening. And we look forward to meeting back in New York soon again. Have a good day.